SECTION A: (20 marks)

1. Demand can be defined as the quantity of goods and services that

A) Satisfy human wants.

B) Are brought to the market at a given price.

C) Consumers are willing to buy at a given price.

D) Are desired by the consumers.

2. Which of the following is a long-term liability?

A) Creditor.

B) Capital.

C) An overdraft.

D) A bank loan.

3. Sole proprietorship are preferred to partnership because they

A) Earn more profit.

B) Are easy to set up.

C) Enjoy limited liability.

D) Are easy to expand.

4. Advertising is important to a business because it

A) Increases the sales of goods and services.

B) Creates employment opportunities.

C) Reduces the prices of goods and services.

D) Increases the supply of goods and services.

5. Road transport is widely used in Uganda because it is

A) Reliable.

B) Quick.

C) Cheap.

D) Flexible.

6. Which one of the following documents allows a public company to appeal for shares from the public?

A) Certificate of Incorporation.

B) Articles of Association.

C) Memorandum of Association.

D) Certificates of Origin.

7. F.O.B. quoted exclude

A) Cost of carriage to the docks.

B) Loading expenses onto the ships.

C) Insurance charges.

D) Handling charges at the docks.

8. What is Mukoli's mark up if he purchased an article at shs 200,000 and sold it at shs250, 000?

A) 80%

B) 25%

C) 125%

D) 20%

9. The loss of value of an asset due to over use is called

A) Depletion.

B) Devaluation.

C) Obsolescence.

D) Depreciation.

10. Which of the following is a reward for an entrepreneur?

A) Interest.

B) Profit.

C) Wage.

D) Rent.

11. The provision of services falls under the production called

A) Commercial .

B) Primary.

C) Tertiary.

D) Secondary.

12. The principle of insurance violated when the insured over-values his/her property is

A) Utmost good faith.

B) Insurable interest.

C) Subrogation.

D) Proximate cause.

13. Which of the following is an advantage of a partnership?

A) Unlimited liability.

B) Quick decision making.

C) Making no losses.

D) Pooling resources.

14. Double coincidence of wants occurs when each of the parties involved in barter trade has

A) Exactly what the other one has.

B) Exactly what the other one wants.

C) Twice as much as the other.

D) Similar wants as the other.

15. What is the value of current assets of a business which has the following records?

Cash shs300, 000

Loan shs 75,000

Stock shs 100,000

Creditor shs 5,700

Debtor shs2, 500

A) Shs333,600

B) Shs406,000

C) Shs477,900

D) Shs402,900

16. The form of selling where the seller owns the property until the final installation paid is

A) Deferred payment.

B) Credit transaction.

C) Hire purchase.

D) Future deal.

17. A consumer will demand a commodity which

A) Satisfies his or her needs.

B) Is often scarce.

C) Is sold in bulk.

D) Has been extensively advertised.

18. An order by the importer placed with an agent to purchase goods from a named exporter is

A) Proforma invoice.

B) Letter of credit.

C) Closed indent.

D) Bill of lading.

19. In business, a loss arising from irrecoverable debt is called

A) Insolvency.

B) Bad debt.

C) Dead stock.

D) Dead weight debt.

20. The term of payment where the carrier demands payment before releasing goods to the buyer is

A) Spot cash.

B) Prompt cash.

C) Cash on delivery.

D) Cash with order.

SECTION B: (80 marks)

21. a) State the difference between persuasive advertising and informative advertising.

b) Explain the importance of advertising to the:

i) Manufacturer.

ii) Consumer.

22. a) Mention any two commodities transported by pipeline.

b) Give any:

i) Four advantages.

ii) Two disadvantages.

Of pipeline transport.

c) What factors influence the choice of means of transport?

23. a) Distinguish between the following types of partners:

i) active partner and dormant partner,

ii) general partner and limited partner,

iii) Real partner and quasi partner.

b) Outline the rights and duties of a business partner.

24. a) Differentiate between:

i) Whole- life policy and endowment policy.

ii) Co-insurance and re-insurance.

iii) Over-insurance and under-insurance.

b) Explain the role of insurance companies in the documents used in home trade of Uganda.

25. a) State the function of each of the following documents used in home trade

i) Advice note.

ii) Debit note.

iii) Statement of account.

iv) Credit status inquiry.

v) Receipt.

b) Outline any five factors influencing the distribution of goods and services.

26. a) Describe the functions of a commercial bank.

b) Outline the characteristics of the following bank accounts.

i) Savings.

ii) Current.

ii) Fixed deposit.

c) Under what conditions may a commercial bank refer a cheque to the drawer?

27. a) What is meant by Stock Exchange?

b) Explain the importance of a Stock Exchange to a country.

c) Describe the role of the following in a Stock Exchange.

i) Brokers.

ii) Jobbers.

28. a) Define the following terms as used in commerce:

i) Working capital.

ii) Capital owned.

iii) Liquid capital.

b) Mujomba had an opening stock of shs 350,000 and a closing stock of shs410, 000. His net purchases were shs1, 820,000, expenses were shs 1,820,000, expenses were shs 150,000 and sales were shs3, 100,000.

Calculate the:

i) Cost of sales.

ii) Gross profit.

iii) Average stock.

iv) Net profit.